May 9 (Bloomberg) -- Two BNP Paribas SA mortgage-bond
traders who invested money for France’s largest bank left the
lender’s New York securities unit last month, according to four
people with knowledge of the departures.

The traders, Michael Pyatski and Mattan Horowitz, focused
on U.S. home-loan securities with government backing and related
derivatives, said the people, who asked not to be named because
the information isn’t public. Horowitz declined to comment when
reached by telephone. A phone number listed for Pyatski was out
of service, and he couldn’t immediately be reached for comment.

Cesaltine Gregorio, a spokeswoman for BNP Paribas in New
York, declined to comment.

Banks are adapting trading businesses to an international
accord calling for lenders to hold more capital and liquid
assets and the Volcker Rule, the piece of the 2010 Dodd-Frank
Act that limits the risks banks can take with their money. BNP
Paribas is seeking to “manage our costs and resources
efficiently,” fixed-income head Frederic Janbon said at meeting
for investors in March.

“We’re adapting the business model and taking steps to
remain lean,” Janbon said.

Pyatski worked at BNP since at least 2001, while Horowitz
joined from Credit Suisse Group AG in 2010, according to
Financial Industry Regulatory Authority records. On his profile
on LinkedIn Corp.’s website, Pyatski said he was head of a
“proprietary trading desk” focused on agency mortgage-backed
securities. Horowitz described his role as trading “the entire
agency MBS spectrum” as a prop trader for BNP, according to his
LinkedIn page.

Volcker Exemption

Gregorio said she couldn’t comment on the traders’
descriptions of their roles.

While the Volcker Rule prohibits investments by banks meant
to profit over the short term, known as prop trading, it
includes exemptions for debt including Treasuries and
government-backed, or agency, mortgage securities. Prop trading
can also involve longer-term wagers by securities firms that
aren’t tied to helping clients.

The Paris-based lender said in February it was replacing
its co-heads of fixed income in the Americas with Bob Hawley,
who had been leading the business in the Asia-Pacific region.
That followed a restructuring of its corporate and investment
banking unit announced last year. It also cut mortgage-bond and
interest-rate traders and salesmen in New York this year,
including head mortgage-bond trader Harpal Maini.

The $5.4 trillion agency mortgage-bond market last year
suffered its first annual loss since 1994 even after the Federal
Reserve in 2012 started open-ended purchases of the debt. As the
Fed began reducing its buying, the securities soared 3.1 percent
this year, Bank of America Merrill Lynch index data show.